Crude oil prices fell earlier today, with both Brent and U.S. WTI futures dropping below $48 a barrel because of a global oversupply, following a volatile session the previous day when prices had rebounded sharply from near-six-year lows.
By 0721 GMT, Brent was down over a dollar, or 2 percent, at $47.56 a barrel, while U.S. crude CLc1 was trading at $47.61 a barrel, down 87 cents.
“A war for output market share means oil prices are skewed to the downside. Funds are unwinding a large positive investment premium, but further selling is possible,” ANZ said earlier today.
Wednesday’s 4.5 percent surge in Brent LCOc1, the biggest percentage gain since June 2012, had come as traders covered themselves on expiring options.
However, market sentiment remains bearish due to a supply glut, with international Brent crude futures falling below their U.S. WTI equivalents.
“We are lowering our Brent price forecast: to $50.25/barrel from $72.25/barrel in 2015; to $67.50/barrel from $83/barrel in 2016; and to $77.25/barrel from $90/barrel in 2017,” U.S. investment bank Jefferies International said on Thursday.
Jefferies said the use of floating storage would, in the near term, absorb barrels but noted that “those same barrels will eventually be delivered and could moderate a future price recovery”.
Adding to the downward pressure on prices, Russian output has reached levels not since seen the end of the Soviet Union.
ANZ bank said that it saw a 60 percent chance Brent would range between $40 and $60 a barrel in the first half of the year, a 30 percent possibility of prices falling to $35-45 during that time and only a 10 percent chance of prices going up to $60-80 a barrel.
